CalPERS  LONG  TERM  CARE  INSURANCE    CRCEA  COMMITTEE  ACTIONS  

By  Mike  Sloan    

As  Vice  President  of  the  California  Retired  County  Employees  Association,  I  have  been  asked  to  sit  on  a  committee  that  has  been  tasked  with  challenging  the  CalPERS  Long  Term  Care  Program  proposed  rate  increases.    We  are  aware  of  the  large  number  of  members  that  purchased  this  insurance,  some  almost  20  years  ago.    This  report  is  intended  to  update  those  members  interested  in  what  is  being  done  on  their  behalf  regarding  this  issue.  

 

1. May  7,  2013   Letter  sent  to  CalPERS  responding  to  a  statement  posted  on  their  website:    “CalPERS  will  be  collaborating  with  constituent  groups,  such  as  the  Retired  Public  Employees  Association  (RPEA),  Service  Employees  International  Union  (SEIU),  California  State  Employees  Association  (CSEA),  California  State  Retirees  (CSR),  California  State  University  Retired  Faculty  (CSURF)  and  others  to  provide  educational  materials  to  help  explain  the  options  available  to  policyholders.”      

 CRCEA  requested  that  we  be  included  as  one  of  the  constituent  groups.    A  reply  was  received  from  CalPERS  in  late  May  confirming  that  CRCEA  would  be  allowed  to  be  one  of  the  chose  constituent  groups.    CRCEA  was  granted  a  spot  on  CalPERS  “educational  committee”,  however,  no  meetings  have  been  held  or  scheduled.  

2.   Also  on  May  7th,  the  California  Assembly  Committee  on  Aging  and  Long  Term  Care  held  a  hearing  to  discuss  this  issue.    They  found,  as  CalPERS  has  previously  stated,  “the  program  was  poorly  planned  and  executed.”  The  committee  also  noted  in  CalPERS  advertising  documentation  from  1998  stated,  “With  this  option,  your  plan  is  designed  to  remain  level  and  won’t  increase  each  year.”    CalPERS  estimates  that  approximately  75%  of  the  people  with  LTC  insurance  purchased  the  lifetime  benefits  or  inflation  protection.  

  The  committee  also  found  that  the  long  term  care  insurance  industry  as  a  whole  was  in  a  similar  predicament.    Many  insurers  have  discontinued  selling  the  “life  time,  inflation  protected”  coverage.    Others  have  left  the  business  entirely.  Last  year  John  Hancock  Life  Insurance  received  approval  for  a  40%  rate  increase,  and  CNA  Financial  Corp.  has  requested  a  45%  increase.  

3.   An  email  was  sent  to  CRCEA’s  lobbyist  in  Sacramento,  Amy  Brown,  to  get  her  advice  on  how  best  to  proceed  with  drafting  a  bill  which  would  place  CalPERS  Long  Term  Care  Insurance  program  under  the  jurisdiction  of  the  California  Department  of  Insurance.    These  talks  are  ongoing,  as  well  as  searching  for  a  legislature  willing  to  sponsor  and  carry  the  bill.  

4.   June  5,  2013,  wording  for  a  draft  bill  to  amend  the  California  Insurance  Code,  Section  740,  was  sent  to  the  CRCEA  lobbyist  in  Sacramento  to  be  used  in  attempting  to  locate  a  sponsor  for  such  an  amendment.  

5.   June  5,  2013  a  Public  Records  Act  request  was  sent  to  CalPERS.  We  requested  the  following  info:    

Actuarial  valuations  of  the  Long  Term  Care  (LTC)  Program  Reports,  studies  or  recommendations  regarding  the  LTC  program  rates  from  2010  

Pension  and  Health  Benefit’s  Committee  (PHBC)  recommendations  regarding  LTC  rates  Support  documentation  for  all  PBHC  agenda  items  dealing  with  LTC  program  rates  Supporting  documentation  for  all  Board  of  Administration  agenda  items  for  LTC  rates  

 

6.   On  June  18th,  the  CRCEA’s  LTC  research  committee  received  the  requested  records  on  a  disk.    Those  records  are  being  reviewed  for  information  beneficial  to  our  purpose.  

7.       June  28,  2013  a  letter  was  sent  to  California  Department  of  Insurance  Commissioner  Dave  Jones  requesting  his  agency  investigate  the  proposed  CalPERS  rate  increase  to  determine  if  this  rate  adjustment  could  be  mitigated  by  his  department.    Commissioner  Jones  replied  on  July  8,  2013,  and  explained  that  “by  law  CalPERS  long  term  care  insurance  is  not  under  the  jurisdiction  of  the  Department  of  Insurance  as  it  is  a  self-­‐funded  plan  overseen  by  the  CalPERS  Board  of  Directors”.  

8.   On  June  28,  2013,  a  letter  was  sent  to  Elaine  Howie,  California  State  Auditor,  requesting  that  her  office  audit  the  books  of  CalPERS  Long  Term  Care  Program.  

 9.   August  5,  2013  the  law  firm  of  Shernoff  Bidart  Echeverria  Bentley  LLP  filed  a  suit  in  Los  Angeles  

Superior  Court  seeking  class  action  status.    I  have  since  had  several  telephone  discussions  with  Greg  Bentley  (lead  attorney  for  this  suit),  and  they  are  aware  of  the  numerous  retiree  organizations  that  are  available  for  assistance  with  the  case  if  needed.  

 10.   CalPERS  requested  additional  30  days  to  respond  to  the  complaint  filed  in  the  above  action,  and  

their  response  is  due  on  October  9,  2013.    11.   What  happens  to  those  that  have  decided  to  drop  their  coverage?    Will  they  receive  any  benefit  

from  the  lawsuit?    Could  they  have  their  coverage  reinstated  back  to  their  status  in  May  2013?    These  questions  are  yet  to  be  determined  by  the  court  as  the  law  suit  progresses.  

 12.   RECOMMENDATIONS:    If  it  is  financially  feasible,  continue  your  coverage  until  2015  by  paying  

the  5%  increases.    If  this  is  not  feasible,  considering  decreasing  the  coverage  to  one  of  the  options  offered  by  CalPERS  to  maintain  your  policy  until  the  lawsuit  is  decided.